If you are thinking about selling a business or shares, it is important to understand how Business Asset Disposal Relief works, particularly with rates set to increase from April 2026.

Business Asset Disposal Relief (BADR) provides a valuable tax advantage, offering a reduced rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company or an individual’s stake in a trading partnership.

The present rate of BADR is 14% for disposals made during the 2025-26 tax year. Currently, these rates are set to increase in the 2026-27 tax year starting on 6 April 2026 to 18%. As a result, disposals made after April 2026 will face a higher CGT rate.

These planned changes in the BADR rates can have a significant impact on tax planning for business owners and investors. Furthermore, it is worth noting that upcoming measures in the Autumn Budget could further diminish the benefits of these reliefs.

Despite these changes, the lifetime limit for claiming BADR currently remains at £1 million, which means that individuals can use the relief multiple times, provided their total gains from qualifying disposals do not exceed this threshold.

Changes have also been made to Investors’ Relief. As of 30 October 2024, the lifetime limit for Investors' Relief was reduced from £10 million to £1 million, with CGT rates now aligning with those for BADR at 14% and set to rise to 18% in April 2026.

If you sell assets such as shares or land, you may need to report your Capital Gains Tax either through Self-Assessment or HMRC’s ‘real time’ CGT service; deadlines and rates depend on the type of asset sold.

If you have Capital Gains that are not related to the sale of UK residential property after 6 April 2020, there are two main ways to report them. The first is by filing a self-assessment tax return or using the ‘real time’ Capital Gains Tax (CGT) service. Before reporting, you must determine if you need to pay tax and how much you owe.

For reporting in a self-assessment tax return, you will include your Capital Gains for the tax year after you sell or dispose of an asset. You can seek help from an accountant or tax advisor, and after submission, HMRC will provide details on how and when to pay.

Alternatively, the ‘real time’ CGT service allows you to report gains from assets sold during the 2024-2025 or 2025-2026 tax years. This service is only available to UK residents and cannot be used for certain items like UK residential property gains or foreign tax credits.

After reporting, HMRC will issue a payment reference number (starting with ‘X’), which you can use for payments via online banking, cheque, or the online tax payment service. You must report your gain by 31 December in the tax year following the gain and pay by 31 January. For example, if you made a gain in the 2024-25 tax year, you need to report it by 31 December 2025 and pay by 31 January 2026.

The main CGT rates for assets other than residential property and carried interest is currently 18% for Income Tax basic rate payers and 24% for Income Tax higher rate payers.

If you sell UK residential property not covered by the Private Residence Relief, for example, a second home, then you must report the sale with a calculation of any CGT due, within six months of completing the sale. HMRC have set up a separate filing process to report these gains.

Business Asset Disposal Relief (BADR) offers a significant tax benefit by reducing the rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company or an individual’s interest in a trading partnership.

On 6 April 2025, the BADR CGT rate increased from 10% to 14% for disposals made in the 2025–26 tax year. However, the rate is set to rise again from 6 April 2026, to 18%. This means that qualifying disposals made after April 2026 will be subject to a higher CGT rate once again.

The lifetime limit for claiming BADR remains at £1 million, allowing individuals to claim the relief multiple times as long as the total gains from all qualifying disposals do not exceed this threshold.

In addition to changes to BADR, there were also changes to Investors’ Relief. Since 30 October 2024, the lifetime limit for Investors' Relief has been reduced from £10 million to £1 million. The CGT rates for Investors' Relief also align with those for BADR, currently set at 14% and also rising to 18% from April 2026.

These increases in CGT rates are significant and will impact tax planning strategies for business owners and investors. It is also important to note that further changes may be announced in the forthcoming Budget that could further chip away to the benefits of this relief.

Business Asset Disposal Relief (BADR) still offers a valuable tax break, but the CGT rate has risen to 14% from April 2025 and will increase again to 18% in April 2026.

BADR provides a valuable tax advantage by offering a reduced rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company, or an individual’s interest in a trading partnership.

The limits for BADR increased for disposals made on or after 6 April 2025. This has seen the CGT rate now applied at a rate of 14% (up from 10%). This change is now in effect and applies to any qualifying disposals taking place within the 2025–26 tax year.

The rate is set to increase again from 6 April 2026, to 18%. This means that disposals qualifying for BADR on or after this date will face a significantly higher CGT rate when compared to the previously long-standing 10% rate.

The lifetime limit for claiming BADR remains at £1 million, allowing individuals to benefit from the relief more than once, provided the cumulative gains from all qualifying disposals do not exceed this threshold.

Additionally, changes have been made to Investors’ Relief. The lifetime limit for this relief was reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. In addition, the CGT rates for Investors’ Relief are now aligned with those for BADR, currently set at 14% and increasing to 18% from April 2026.

Gift Hold-Over Relief is a form of Capital Gains Tax (CGT) relief that allows you to defer paying CGT when certain assets, such as qualifying shares, are given away or sold for less than their market value, typically to benefit the recipient.

Instead of paying tax at the time of the gift, the gain is "held over" and passed on to the person receiving the asset. This reduces their base cost for CGT purposes, meaning the tax is only due when they eventually sell or dispose of the asset.

The individual making the gift will not usually have to pay CGT, as long as the transfer qualifies. However, CGT may still apply if the asset is sold at an undervalue rather than gifted outright. Transfers between spouses or civil partners are generally exempt from CGT.

A joint claim for the relief must be submitted by the giver and the recipient of the business asset gift.

To claim Gift Hold-Over Relief on business assets, you must meet all of the following:

• Be a sole trader, a business partner, or hold at least five percent of the voting rights in a company (your personal company).
• The assets must have been actively used in your business or in your personal company.

If the asset was only partly used for business purposes, partial relief may still be available.

To qualify for the relief when giving away shares, the shares must be in a company that is either:

• Not listed on any recognised stock exchange, or
• Your personal company.

In addition, the company must be primarily involved in trading activities, such as supplying goods or services. Companies that are mainly engaged in non-trading activities, such as investment, will generally not qualify.

Items discovered lying on land or buried in the soil, such as antiques or historical objects, are treated as chattels for Capital Gains Tax (CGT) purposes. This remains true even if ownership is tied to the ownership of the land where the item was found. Since these objects were not intended to be permanently affixed to the land, they are not considered fixtures and are therefore treated as movable personal property.

As chattels, these objects may benefit from specific CGT exemptions. The chattels exemption generally applies to items with a predictable useful life of 50 years or less. Common examples of chattels include household furniture, artwork, antiques, silverware, motor vehicles, and machinery not permanently installed in a building.

Gains from the sale of chattels are exempt from CGT if the sale proceeds are £6,000 or less per item. If the proceeds are between £6,000 and £15,000, marginal relief may apply. In these cases, the gain is the lower of the actual gain or 5/3rds of the amount above £6,000. Where a set is sold the £6,000 limit applies to the set and there are special rules to sets that have been broken up and sold separately.

Who values goodwill when a business is sold? HMRC's Shares and Assets Valuation team takes the lead.

Whether the goodwill belongs to a sole trader, partnership or limited company, HMRC’s SAV team will either accept the submitted valuation, give their own open market estimate, or state they need more information.

For non-corporate goodwill, the SAV team have the following options for valuing goodwill:

• Accepting the valuation
• Providing an opinion of Open Market Value if the claim appears under or overvalued
• Stating that insufficient information is available to form a view

Corporate goodwill valuations are usually submitted directly to SAV as informal or formal requests. When Trade Related Property is involved, the SAV team will liaise with the Valuation Office Agency.

These are the key issues the SAV team will look at when valuing goodwill:

• the full sale and purchase documentation relating to the transfer of both tangible and intangible assets;
• succession arrangements;
• the valuation approach used – e.g. capitalisation of profits, super profits or a trade specific method;
• the activities of the business and role of the owners within it;
• the financial statements/accounts (including the detailed trading and profit and loss account) for the 3 years before valuation;
• any other relevant financial information;
• appropriate yield and multiples of comparable companies and sectors;
• the commercial and economic background at valuation date;
• how the personal goodwill of the owner has been reflected in the valuation; and
• any other relevant factors.

Open market value must exclude any assumptions about a "special purchaser" unless industry norms support synergy-based premiums.

The BADR Capital Gains Tax rate has risen to 14% from April 2025 and will increase further to 18% in April 2026.

Business Asset Disposal Relief (BADR) offers a valuable tax advantage by applying a reduced rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company or an individual’s interest in a trading partnership.

As part of the measures announced in the Autumn 2024 Budget, the CGT rate for gains eligible for BADR has increased. For disposals made on or after 6 April 2025, the CGT rate has risen from the previous 10% to a higher rate of 14%. This change is now in effect and applies to any qualifying disposals taking place within the 2025–26 tax year.

Another forthcoming increase to the CGT rate under BADR is set to take place from 6 April 2026. It will rise to 18%. This means that disposals qualifying for BADR on or after this date will face a significantly higher tax charge compared to the original 10% rate that had long been associated with the relief.

The lifetime limit for claiming BADR remains at £1 million. This means that individuals can still benefit from the relief more than once, provided the cumulative gains across all qualifying disposals do not exceed this threshold.

Changes have also been made to Investors’ Relief. Specifically, the lifetime limit for Investors’ Relief was reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. In addition, the CGT rates for Investors’ Relief have now been brought in line with those of BADR currently at 14% and increasing to 18% from April 2026.

Business Asset Rollover Relief, allows taxpayers to defer Capital Gains Tax (CGT) on gains arising from the sale or disposal of certain business assets, provided the proceeds are reinvested into new business assets. Rather than paying CGT immediately, the gain is "rolled over" into the cost of the new asset, and the tax liability is deferred until that new asset is eventually sold.

If part of the proceeds from the original asset’s sale is reinvested, a partial rollover relief claim can be made. Taxpayers may also apply for provisional relief if they intend to purchase replacement assets but have not yet done so. Additionally, rollover relief may apply where the proceeds are used to improve existing business assets, not just to acquire new ones. The amount of relief available depends on how much of the proceeds are reinvested.

To qualify, certain conditions must be met. The replacement assets must be purchased within three years after, or up to one year before, the disposal of the old assets. In some cases, HMRC may extend these time limits. Both the old and new assets must be actively used in the business, and the business must be trading at the time of sale and acquisition. Finally, the relief must be claimed within four years from the end of the tax year in which the new asset was acquired, or the old one sold, if that occurred later.

A negligible value claim lets taxpayers declare an asset worthless for tax purposes, realising a capital loss without selling. This can be backdated up to two years, offering flexibility in managing tax liabilities.

A negligible value claim is a claim made by a taxpayer when an asset they own has significantly decreased in value, essentially becoming worthless or worth next to nothing.

In such a situation, the taxpayer may treat the asset as if it were disposed of even though the retain ownership. For a negligible value claim to be valid, the asset must still be owned by the individual making the claim, and it must have become of negligible value while under their ownership.

The primary benefit of making a negligible value claim is that it allows the taxpayer to realise a capital loss on the asset without the need for an actual sale or disposal. This is particularly advantageous for assets that could, in theory, regain value at some point in the future. By retaining ownership of the asset, the taxpayer maintains the potential for any future recovery in value, even if the likelihood of this occurring is remote.

HMRC provides a negligible value list, which includes shares or securities that were previously quoted on the London Stock Exchange and have been officially declared of negligible value for the purpose of making such claims. For assets not on this list, a formal application must be submitted to HMRC to agree upon a valuation, enabling the taxpayer to establish the asset’s negligible value.

Additionally, a negligible value claim is not restricted to the current tax year. It can be backdated to cover up to two preceding tax years, provided all other qualifying conditions are met. This feature allows taxpayers greater flexibility in managing their capital losses over a longer period.